China stock funds attract most cash since April 2008 in latest week: BofA

By Sam Forgione

NEW YORK (Reuters) – Investors worldwide poured $4.5 billion into funds that specialize in Chinese stocks in the week ended May 27, marking the biggest weekly inflows into the funds since April 2008, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

Stock funds overall attracted $4.6 billion after posting $600 million in outflows the prior week, according to the report, which also cited data from fund-tracker EPFR Global. Funds that specialize in U.S. shares posted $3.9 billion in withdrawals to mark outflows from the funds in nine of the past 10 weeks, the report said.

Bond funds posted $400 million in outflows after attracting $1.4 billion in inflows the prior week, marking just the second week of outflows from the funds so far in 2015. Funds that mainly hold U.S. Treasuries posted $1.4 billion in withdrawals to mark their fifth straight week of outflows.

Cameron Brandt, director of research at EPFR Global, said China equity funds “found themselves on course for a record weekly inflow as investors responded to the perception that China’s central bank will unveil further stimulus measures to defend this year’s 7 percent GDP growth target.”

The China wagers may have been ill-timed for some investors as the country’s equity markets plunged 7 percent on Thursday after more brokers tightened margin trading requirements and the central bank drained money to reduce flush liquidity in the financial system. The index is still up 43 percent so far this year.

EPFR global-tracked China equity funds have absorbed $4.5 billion, more than double the previous record set during the first week of the second quarter 2008.

Within the $4.6 billion inflows into stock funds, the BofA report noted the divergence between the $6.3 billion of net inflows into ETFs and $1.7 billion of net withdrawals of mutual funds.

Investors in exchange-traded funds are thought to represent the institutional investor, including hedge funds. Mutual funds are thought to represent retail investors.

(Reporting by Sam Forgione; Editing by Chizu Nomiyama and Christian Plumb)